Pakistan is moving closer to securing the next tranche of its International Monetary Fund programme, with Finance Minister Muhammad Aurangzeb saying most of the required steps have been completed.
Speaking on Tuesday, the minister said the IMF’s executive board is expected to take up Pakistan’s case on May 8, where approval of a USD1.2 billion tranche is anticipated. The country is aiming for economic growth of around 4 percent this fiscal year, supported by signs of improving stability.
Focus on risks and recovery
Addressing the EU-Pakistan Business Forum, Aurangzeb said the government is preparing different economic scenarios to deal with global risks. These include possible oil price shocks, supply chain disruptions and rising inflation linked to tensions in the Gulf.
He acknowledged that pressure on the energy sector has already added to inflation concerns, in line with projections from the State Bank of Pakistan.
At the same time, the government is working to reduce its reliance on bilateral dollar inflows. Aurangzeb said Pakistan plans to tap international markets through bonds and commercial borrowing as investor confidence begins to return.
IMF programme on track
The minister said the staff-level agreement reached with the IMF on March 27 has largely been implemented. This clears the way for the third review under the Extended Fund Facility and the second review under the Resilience and Sustainability Facility.
Approval from the IMF board is expected to unlock fresh inflows and support the country’s external position. An IMF mission is also likely to visit Pakistan in mid-May to begin talks on the next federal budget.
Aurangzeb said Pakistan has posted both a primary and overall fiscal surplus, while debt servicing costs are expected to remain below earlier estimates, creating some breathing space for the government.
External position improves
The country’s external accounts have shown clear improvement, with foreign exchange reserves projected to reach USD18 billion by June. This is despite large repayments, including USD3.5 billion to a bilateral partner and USD1.4 billion in Eurobonds.
The minister highlighted steady inflows from overseas Pakistanis, with remittances averaging USD3.8 billion per month. Deposits under Roshan Digital Accounts are also holding firm, while IT exports continue to grow.
New borrowing strategy
Aurangzeb confirmed a shift in the government’s borrowing approach, with plans to raise funds through instruments such as Panda bonds, Eurobonds and Sukuk.
A USD250 million Panda bond is expected to be launched in May, backed by guarantees from multilateral lenders including the Asian Development Bank and the Asian Infrastructure Investment Bank. Talks with Chinese authorities are said to be in the final stages.
Policy steps and reforms
On fuel pricing, the minister said the government had limited options after global oil prices rose following the Gulf conflict, leading to higher petroleum levy adjustments.
He also announced that a contributory pension scheme for the armed forces will be introduced from the 2026-27 budget, marking a key structural reform.
To improve coordination during external shocks, the government has set up the National Coordination and Management Council. The Debt Management Office has also been restructured to strengthen oversight and improve efficiency.
Aurangzeb said Pakistan has managed the initial impact of the Gulf situation and is now assessing wider effects across different sectors as it works to keep the economic recovery on track.
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